Hyde completes £760m corporate financing restructure

The Hyde Group has completed the final phase of its current finance strategy. Hyde Housing Association, its parent entity, has undertaken a £760m corporate refinancing involving five banks, which gives it a modern and flexible financial framework. The move, in combination with the raising of £575m of new group liquidity earlier this year, reinforces Hyde’s financial status and ensures its five-year development programme is entirely funded with a healthy buffer held in reserve.

The refinancing will:

See the establishment of up to £150m of new loan facilities, being an increase in facilities from £1.95bn to £2.1bn overall. Hyde will also benefit from some term loans becoming revolving, creating £325m of overall additional revolving facilities, an average weighted life of 19 years and only £103m of loans maturing in the next three years

Enhance the further expansion of the housing association’s Common Terms Arrangements across the vast majority of its banking relationships putting each on an equal footing

Complete the implementation of a new standardised covenant package that reflects the appropriate and strong asset value and income generating capacity of Hyde rather than the previously more historical focus on grants

Facilitate the c.£173m closing out or restructuring of a material proportion of the association’s derivative positions at an attractive discount. The estimated net impact of break costs and mark-to-market movements this financial year is c.£27m. This derivatives change will result in a c.0.2% p.a. reduction to Hyde’s cost of capital to below 5%, simplifying and reducing the volatility of its hedging portfolio and allowing for the release of £120m of property security. Crucially, it will allow the Hyde Group to better capture the historically low long-term interest rates existing today and which were already seen in the Group’s £400m bond issue earlier this year.

“This financial restructuring exercise completes our financial vision that we set out at the beginning of the year and provides an already-strong Hyde with even greater resilience against any future economic or property market downturn. We now have very little maturing debt over the next three years, a fully funded development programme and approaching half a billion pounds in the bank,” said Hyde Group Finance Director, Peter Denton.

“Although already in good shape, our finances are now up-to-date and more straight-forward. We have a fit for purpose banking structure and are possibly in the best shape in our 50-year history to fulfil our strategic objectives – to do more than our share to alleviate the housing crisis in London and the South East.”

The restructuring exercise follows hot on the heels of the Group’s successful £400m 35 year 3% coupon Martlet Homes bond issue in May 2017 and brings the total of bond and bank finance raised/restructured by the Hyde Group this year to £1.3bn.